the dow? it is down 306, a dive today. fiscal cliff. they are worried about it. they are talking about it in washington. talking. here comes neil cavuto. >>neil: thank you, it looks like taxes could be going so stobs are crashing. is the cliff coming? today better than 312 point could be a preview of coming attractions. that was fast. welcome, everyone, president obama is in. but the dow is not wowed investors moving to very real financial bullets, and all ready to shoot off the same minute, exactly the same day, in exactly 54 days, the stroke of midnight, january 1 when all of the cuts begin and all of the bush tax rates phase out.

a multitrillion dollar hit to the economy that could turn a recovery into a stubborn recession faster than you can spit out going to knell a hand basket which the folks at moody's threaten could cost us dearly in the form of another debt downgrade. that would likely tank the dollar and bond and stocks. we are that close and that scary on the day when europe got more scary and germany was pumped. the debt crisis likely to hit there hard as another storm, this one, a huge nor'easter prepares to hit america's east coast harder. and sooner. try...today. look outside my office part of a huge nor'easter winter storm coming to the new york area some parts could be under 1' of snow. wall street says they will weather the nor'easter but not

so sure about the perfect form storm at the end of next month. what will happen? >>guest: well, listen, there are a couple of things. the election result wasn't great and a lot of my wall street contacts thought romney had a chance so there was a let down. i am surprised that the dow did not finish further. there are things you mention with regard to europe. the ecbc equivalent, equal to our bernanke, he said, look, the slow down in europe is also germany, including the biggest economy over there so that is a problem. you are seeing the snowball effect of our slowing economy affecting folks overseas. >>neil: you remind me markets hate uncertainty so they have the unknown of the election out of the way and many may not like the results and many did not

care it is over, done, but it is the concern about what happens with the fiscal cliff. there are hints the two sides will try to dance together but they do not have a lot of time. >>guest: it is probably half a song of a dance and it is not good. not enough time and it is one of those things where the fiscal cliff can be dealt with with regard to the marks and the economy, if there is some spending cuts, especially on the entitlement programs which threaten to bankrupt our budget as it is, to go alongside the cuts so i don't know if that going to happen. if you look at what speaker boehner said today it is like we are pulling the pin from the grenade and say let's see how long it waits to explode and then we will figure out how much time we have. >>neil: and this is the prevailing notion that maybe republicans think, we will try to bend, we hope the president will bend, he won the election

but not a huge mandate given the chose nature of the popular vote, and that is how they will play it, but they can put together some sort of a deal to allay the market of concerns with precarious disaster about to befall us, will that work with guys like you in what do you want to see? >>guest: we need to see confidence instilled in us with regard to the future of taxes, but the future of business, the one solution i have out this for both sides of the aisle, get confidence back because there is one way to fix this, and that is the g-word "growth. higher taxes will not matter with a strong economy. looking back at history, 2010, and president obama, it grew at 3 percent. 201, 1.7 percent and now we are facing growth of 1.5 percent. that ain't the right direction. >>neil: thank you, scott

martin in chicago. the election concluding, the fiscal cliff looming and dead the first sign that republicans are blinging. house per speaker saying moments ago all options including tax hikes could be on the table the listen to this. >> because the american people expect us to find common ground^, we are willing to accept some additional revenues through tax reform. we are willing to accept new revenue under the right conditions. >>neil: did you hear that? still unclear, what are the conditions? to former debt commission co-chair, alan simpson who joins us on the phone. that was, although a lot of people dismiss it, herculean leap toward progress when john boehner is saying i will throw it out there i am hope. what do you think? >>guest: he also said revenue through tax reform so he is getting the message which is go into the tax expenditures, and we found $1 trillion, $100

billion of those babies over 180 who only go 20 percent of the american people using 80 percent of them. only 27 percent of the american people itemize so who is using this stuff? if the money guys are concerned, we will do what we suggested, go in there and get your revenue by doing tax reform and go to the study rate of 8 percent, $70,000 and what we did. anyway, good to hear him talking. in will be a great tap dance. i heard the phrase "the dancing" begins and it will look like fred astaire on steroids. >>neil: but ginger did it backward in heels. maybe i am overanalyzeing because we have not had any sleep the last two days but, senator, when i heard him raise

the loophole issue and the other stuff, that was among the tea party and the rest, that was forbidden, even if you wanted to get rid of a credit and few would be able to take advantage of that, it meant that some who should pay taxes were not paying taxes or those would could pay more taxes were not paying them because it would benefit a select few, and he now is saying, i am open to closing that down, purists say that is tax hike and he is saying i don't care what you call it, it is a negotiating point. what do you make of that? >>caller: remember, to what we were always saying, the reason the market was so calm, not today though, was because they could not believe that the congress could be so stupid as to let this go to the fiscal cliff because they built in their own jaws on this shark when they said do the sequester. all they have to do is a plan.

if they can get a plan signed by democrats and republicans kicking this into july 4, 2013 or whatever, just a plan, a plan that says here is what two parties have agreed to do, that announcement would have a positive affect. >>neil: senator, you have to have more than a promise you have a plan to address it seriously down the road, right? it has to be part of a deal where we will extend this, with the precise oh being when we which conclude the meeting we have next year a firm deal to get this puppy under control. >>caller: i agree but it has to be signed by the leaders of both parties and the people all over the spectrum. >>neil: that is where i worry. listen to something harry reid said about the consequences of this election. >> i want to work together but i

want everyone to understand you can't push us around. >>neil: what do you make 1/2? >>caller: someone will push hill around and it will not be democrats or republicans or anyone, it will be the markets. >>neil: what is what i at thinking. >>caller: he ain't going to be able to fight east mark whose say you are addicted to spending, you are addicted to borrowing, and here we are, we will loan you more money and the interest rates are going up and inflation will kick in and interest rates will go up and guess would gets hurt? the little guy that harry reid and the rest of them talk about. >>neil: that is right. and another thing the markets, everyone thinks this is a red crowd but i have always argued with the markets they are not red or blue they are just green. green. and god bless them and they see both parties screwing this up. they are saying better get a handle on this or this country is going down. moody's is threatening another

downgrade. you have others questioning the stability of the dollar going forward. china, today, looking at alternative investment and this is the world telling us, you guys are looking like a joke, we don't care who is in charge, we blame both parties, right? >>caller: someone has to pretend that the word "compromise" does not mean you are a wimp and if you cannot compromise an issue without compromising yourself you should not be in congress and you should never get married. >>neil: alan i cannot top that. a historic day on so many levels, the senator tried to recognize the obvious, both sides have to get hopping, the markets may have precipitated this. no deal? no jobs in to hear some tell it,

congress and the president do now settle, they will not hire. the founder and co-c.e.o. of panera bread. that is a legitimate threat, right? these guys, all the guys in washington have to get serious about this or you and your not a political stripe among you colleagues, you are going to sit, right? >>guest: absolutely. you saw it in the election. there was no mandate from a partisan position or the other. there was a demand from the people of america wanting solutions to the problems and you her it from president obama last night, governor romney last night, you her it from speaker boehner today, all of them are speaking about solving problems. will they do it? can we demand it? >>neil: we have talked so often the last year, everyone

wants to save face, no one wants to look like they caves the old ronald reagan story, they will be happy with 80 percent of the loaf rather than no loaf at all, so everyone is afraid of giving away too much but if democrats are open to some reform in entitlements or slowing the growth of the entitlements and republicans open themselves up for closing loopholes as dramatically although it did not get much press coverage i caught it, speaker boehner's openness to closing loophole credits and the rest that used to be akin to reagans -- raising taxes that is a start. >>guest: the only solution that is unacceptable, that is to not have a solution. we cannot kick the can down the road. it is that simple. we in the business community are demanding it. we in "no labels" demand it. have a solution. a solution.

realistic solutions. >>neil: i thought it was a retail sales thing. i want your take on who you think gets the better deal? if both sides in the case of some democrats on entitlements you pull them in and republicans on special credits you pull them in, it is a win-win? or is there a political danger in the next election, two years out, midterm they will be crucified? >>guest: listen, they should be crucified if they do not solve it. where the decision ends up, you talk about the debt, it 75 percent cost reduction, 25 percent tax increase in some way. you have to put both on the tail. we can fought live in a world where republicans are saying we will never, ever, ever, ever allow a tax increase. we cannot live in a world where democrats say we will never, ever, adjust entitlements.

you can thought solve a problem from an ideological position. we need solutions. >>neil: this is about moving the ball forward. you can be dogmatic but you have to move the ball. well put, ron, thank you very much. well another storm is about to hit these guys are crying out for help. these guys are still giving each other kudos. >> a former federal official and this federal government's performance has been extraordinary.

>>neil: how much can folks take? victims of hurricane sandy are crying out for help. >> we need heat. we need running water. it is sewage water. i don't know if i can make it.

i don't know what to do. i can't do it. >>neil: the leaders are saying they are doing great. >> we thank the administrator if today and more than today, for the federal government's response from day one. >> i thank you and keep doing a great job. >> i thank joe citizens a lot credit. >> they have done a go nominal job. >> i thank the governor for his continued leadership and focus. >> i thank the governor and his team for the great job they have done. >> this federal government performance is extraordinary. >> they are doing an outstanding job. >>neil: okay. hurricane sandy tore his town to shreds but didn't you know they

are doing a great job. >>guest: i was absent for that memo. everyone was doing a great job for the first day when all of the shiny trucks were on the cape and they had a photo opportunity. the people that have been doing a great job are the private citizens giving us food and gloves and giving us rubber boots because we are tracking in mud. otherwise, we saw one red cross truck in the last week. we have gotten m.r.e.'s from the fire department and that is helpful. beside that...maybe we are in a different state. maybe we are not talking about staten island, maybe member. >>neil: even now, staten island is the forgotten borough

getting no respect and, clearly, until we started making people aware of the hell you are going through, no response. is any of that improving? do you feel angry when they make it sound like you are taken care of. >>guest: what is happening now is all the dramatic impact is starting to go away because sanitation came, they removed all the ugly off the streets but now the homes are vacant and condemned and there is nothing -- we have not seen fema. there is no improvement whatever. what will happen is people are going to come out of this shock and will end up getting worse because there are a lot people without homes and a lot of people that have to go to work and they cannot get to work because they have no clothes. nothing is improved. nothing at all. >>neil: we will keep an eye on

it. thank you for offering reality to what the politicians tend to ignore. >> some presidents reach across the aisle on day one. >> will this president start, in ♪ [ male announcer ] how could a luminous protein in jellyfish, impact life expectancy in the u.s., real estate in hong kong, and the optics industry in germany? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing.

>>neil: the election has wrapped up and now it is time for someone to pay up. >> this is likely to be a very close election the how close? we don't know. when we say "close" it means in midsummer it is not obvious which side will win and often it ises have. >>neil: i think you are wrong. you have done this your entire life and this election will not be close and i bet a whole

carton of chunky monkey. >>guest: i bet you a gallon of ben and jerry's. >>neil: i told him to order the ice cream. that is what we are fighting about here. >> i was trying to say you are wrong, neil, completely. >>neil: and larry is pre-ordering the chunky monkey. later later i have been losing weight in anticipation of eating all the chunky not that either of us need that. >>neil: double down here, pal? everyone is wrong on this. ing it is, of course, you are getting that order. you are so wrong, just say neil i will never call you a teleprompter reader again. okay, so i might have lost. but i am holding up my end of the bargain, this is my favorite ice cream on the planet, and i

know i don't look like a guy that likes ice cream i lost to larry and he said it would be lows and i didn't think it would, i thought, well, well...what didn't happen, and larry is right and i am wrong and leader is the thing. i bought the ice cream and larry is under the assumption i am going to get this to him. what is worse, if -- i have expensed this to roger and not a penny -- just kidding. professor, you are right, i was wrong, what did you see in the race, i feel like eating this use tell me, but what did you see usually on that just wasn't breaking despite my insistence there would be a big break and it would be a big win, i was looking at mitt romney and you never were. explain. later i will talk longer so you can get through the ice cream.

>>neil: it will take 30 seconds. >>guest: you are a gentleman for agree dog pay off the debt. here is what i want to do --. >>neil: this is just the appearance but you may notice, my friend, the ice cream is with me and my staff --. >> i realize that and because of that, neil, i want to give that ice cream on your behalf and on my behalf to the wonderful staff that you had, michelle and pam and dan, all the wonderful technicians and camera guys the people would make this work and make you look good every day which is not easy. >>neil: this is doubling down on hurt. by the way i have in intention of sharing this, but...i lost but we kid about this but the whole idea was i felt the polls were underrepresenting republicans i saw in wisconsin

going there for the recount with scott walker and lo and behold he wins by five or six points my theory there must be certainly not a sinister move on the part of pollsters to rig votes i never believed that but i believed there was an anomaly that favored democrats and that was how i rested my soul. so the polls are right. the polls are right. >>guest: the fly in the ointment it would have to be true for several dozen different polling organizes that operate under their own methods and so on and all of them, if they were doing the same thing intentionally or missing the voters unintentionally and the odds of that are minuscule. >>neil: now you are talking down to me. >>guest: no.

>>neil: as only an ignorant child would come to that conclusion from wisconsin only someone that favors an overly sweet ice cream. >>guest: you are a gentleman but a scholar and a gentleman i would never treat you that way i want you to enjoy that ice cream. >>neil: but your take, the polls in the end, is what? they were accurate? yours particularly were dead on which i find doubly hurtful. >>guest: we have used an election model which has been highly accurate and i want to give a shout out to my friend and crystal baller, prefer bramowitz but the election model gives a guideline but we get that in june and july and we knew it would be close. i had a crutch here. i relied on that crutch and now

you will take the ice cream back it was not just polls but in the future i hope everyone will use the polling averages, they can pick their favorite site. >>neil: they have been adjusted to reflect reality. so we have a good accurate barometer. >>guest: we now know they are real. they are rut. they did a good job. they were professional as a group. there are a lot of outliars --. >>neil: all right, all right, all right, all right. you try to read a prompter as eloquently as i can. larry you have been a great sport and we are, is the term, drop shipping, a variety of flavors for you and your staff and i will expense this stuff, the boss will not even know, he went home. you have been a great sport. a lot of people use your fine

services but you are a gentleman and a scholar, a great teacher to us all and helped us after this process and you seem to know a thing or two about poll ing. if you want to know where the money supply comes from, i'm the guy to come to. >>guest: absolutely. all i know about stock coming down is there is profit tailing. >>neil: that is what i said at the top of the show. congratulations, professor, again. quick break and then we will eat up. we have a lot more coming up after this. look at this.

>>neil: get ready for round two after hurricane sandy, a nor'easter, and the mayor is shutting down parts of the city. and david lee is in new york with the latest. david lee? >> the storm has arrived and look over my shoulder. off in the distance you can see the angry atlantic ocean and there is someone we can actually get a camera, one of the few people venturing out to look at the rising tide. we do expect there could be a surge of between 3' to 5' less

than was experienced during the mega storm a few days ago. the good news is they say this is not any significant flooding and the mayor alerting people telling police to drive around the city using loudspeakers warning them to leave. the boardwalk in long beach, you can roll a bowling ball down it and not hit anything. look at apartments, all evacuated all without power. a crew tried to pump the sand from the previous storm out of the parking lot. they were unsuccessful. the recovery from the first storm now made difficult by this nor'easter and perhaps best summed up by chris christie the governor of new jersey, when he heard the forecast, he wondered what was next? is it going to be locust? we hope not.

so far we are in for a rough night. >>neil: it is incredible. be safe. this nor'easter is threatening the power supply. again. it could be lights out. again. it could get ugly and fast. >> like the halloween storm last year, the wind shifted more from the north and that is good news for storm surge but bad if frozen precipitation. >>neil: it is a large swath not at bad as sandy and flooding. >>guest: the radar is misleading. not all of that is sticking because the ground is mild in midtown manhattan but we expect a couple of inches in the city and just outside the city, nassau, connecticut, west chester and new jersey and parts of pennsylvania we could see several frozen precipitation inches. >>neil: people outside of new york, this is just outside our

office, they say, well, big deal, it is neil and a few of his buddies and they will get froze frozen. >>guest: it is a bad combination of events, a lot of people still without power, the frozen precipitation and the cold temperatures do not help. and a lot of trees have leaves on them so in the suburban areas you get a heavy frozen precipitation breaking more branches and the power that has been restored do be lost because of the event. >>neil: what is going on here? >>guest: well, a series of coastal storms. the long term picture is yet to be determined. unfortunately, it is a horrible time of year, a couple months earlier it would be warm enough to be outside and not worry about heat. a couple months later you would not have all the leave on the trees and all the downed limbs.

this is a bad time for both these storms. >>neil: we will keep a close eye on it the second major storm to hit the east coast in seven days. from the wicked storm hitting the northeast to the first cam storm about to hit washington, can congress dig out before it is too late? this guy is not so sure the former c.e.o. of micro systems who says we are in a deep pit. .. where others fail, droid powers through.

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>>neil: we are rushing the ice cream order to larry sabato. my crew is taking it and i paid sure he gets each. what are you guys doing? what are you doing? that is larry's ice cream. okay. you get the idea, it is not "sweet" news for pollsters and

not sweet news in washington for what is going on right now, this is what has scott upset, not the ice cream thing, but washington, perhaps, icing our economy here by not coming to an agreement and soon on the massive debts and deficits piling up. the first hint today is that they are getting close but what if they don't? what happens if they don't? what do you think happens? >> i am not sure that is that big a deal. it is a big deal but we are already on a course, if you look at what happened yesterday out here in california, you look what happened on the national level, nothing changes. congress did not change one bit. the administration doesn't change one bit. nothing happened the last fur years. and it will not happen the next four years. a big day for redistribution. a big day for big government. a big day if the unions. i don't think anything will change going forward. >>neil: you are right about that so that means trillion

dollar gifts build up year after year and we do not yesly address spending and both sides are doing everyone coming closer but you you are not buying it. >>guest: even if they do address this cliff, it is a small piece, i mean, it is acn. medicine on a major disease. it is not going to fix the direction we are on. we are headed to 50 percent of the g.d.p. in the public sector. that becomes very much a directed economy opposed to the invisible hand and a more efficient less corrupt and more libertarian or personal freedoms kind of economy. we are just not there anymore. >>neil: do you think the markets need a deal? more days like this, that will push congress into action?

is that good or bad? >>guest: i think people are -- request know how you undo this. part of the problem with entitlements is a one way ratchet. it gets very hard to unratchet and move back and we are launched now where why know how you stop obamacare and suddenly we are going to have a very poorly written obamacare law that doesn't work and i guarantee they will fix it to make it more nationalized rather than more privatizeed. that happens with insurance, you think of the safety net it is not a trampoline but fly paper. it is velcro. we do not have a safety net for the bottom one or two percent, we have 47 million people on food stamps with an obesity problem. this is the issue around big government buying votes. you look at prop 32 was smoked out here in california.

and unions are clearly in charge. big government is working with big organization. it just so happens the big organizations could be banks that are too-big-to-fail. that means antitrust is not doing its job. if it is too-big-to-fail it should be broken up. if you look at the big organizations that are driving the economy it is big unions. those are the ones that are actually influencing and driving -- i found out recently i asked my buddies, did you realize there was an executive order that said stimulus stuff had to be done by union suppliers and contract ors. since when does it is to be a union to bid on a government contract? most americans do not know that exists. >>neil: there is a lot more we will find out. always a pleasure, scott. cruising to a victory, could this be the guy to show the republican party the way?

i will introduce you after this to senator elect ted cruz. ching] [ male announcer ] the rhythm of life. [ whistle blowing ] where do you hear that beat? campbell's healthy request soup lets you hear it... in your heart. [ basketball bouncing ] heart healthy. great taste. mmm... [ male announcer ] sounds good. it's amazing what soup can do.

>>neil: everyone is wondering what the future of the republican party is after losing the presidency yesterday, one detail you may have missed along latinos nationwide, republicans were:bettered better than seven out of ten latinos nationwide preferred democrats over republicans and specifically, the president over mitt romney. that did not apply in the state of texas. ted cruz was just elected to the united states senate with overwhelming latino support. he is latino himself and he

electrified the republican convention this year. when i spoke to him back then he talked about how easy it would be for the party to make overtures to latinos because they are ripe and ready audience for republican. senator elect, it is good to have you. congratulations. >> thank you, it is always great to be back. >>neil: you seem to be different than what is going on nationally or representative of latino interests nationally. you standout obviously, rubio who you will joint, standout, what is it, though, that you did that on other levels republicans could thought do? >>guest: well, i think as republicans, we need to do a better job communicating our values with the hispanic community. the hispanic community itself is a tremendously conservative community. those are the values that resonate in the hispanic community. and it is interesting if you look the at issues that hispanics are concerned with, they are the same issues everyone is concerned about. the jobs and the economy are

number one among hispanics in this country be they are worried because the country is hurting and why think we did a very effective job of making the case to the his pentagon community that the policies of the obama administration aren't working or hurting small businesses or hurting jobs and we have to be a lot more effective doing so, but, also, doing so with a tone that is naughty vicive. not divisive. speaker boehner seemed to leave on the possibility revenue or tax hikes in whatever fiscal cliff situation they put together. how do you feel? >>guest: we should not be raising taxes, especially when the country is on the brink of a recession. >>neil: what about closing loopholes? ending credits? that sort of thing? >>guest: closing loopholes is fine and good if we are lowering

marginal rates. we knee to focus on growth. our economy the last four years has grown 1.5 percent a year. we need to get it to historical acknowledges of 3 percent or 4 percent or 5 percent. the way to do that is with fundamental tax reform and regulatory reform and were toking burdensome regulation, and if the president means what he said on the campaign trail, that he is interested in working across the aisle to do some of that, i will be happy to work with him. but if he reads this election as a mandate to double down on more and more spending and debt and taxes and regulation, then i will spend every moment in the senate working to help lead the effort to stop that because i think continuing down this pass is very harmful for the country. >>neil: thank you again, senator elect. more after this.

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>> neil: say you were not watching fox business network election coverage last night. here is what you missed. let's get ready to rumble or at least count as we continue our, well, aroundbe the clock, around the calendar, around everything. coverage. >> we need to come to grips with the challenges and our problems. if we don't do it, neil, the pain is going to be that much worse. >> neil: robert walt, big obama backer. >> we all know we need fiscal responsibility to align with what i think a growing economy. you need both sides going. >> neil: allen west, ceo. >> this is america and it's bigger than either party. if we don't work together it won't be a good country. >> the crowd will grow as the evening comes on. there is a cash bar out front in case. >> we'll take you out there. venture out.

>> hopefully we the people will speak of it more and say yeah, you know, you are doing what we have before. we don't like it, things are getting worse. you to change. >> if romney doesn't win, we will see a catastrophic setback in the economy if obama is back in there. >> it will depend on what happens tonight, what happens with the future tomorrow. we could look forward to another four years. that is not going to be a good four years. >> it comes with the bad stuff. still blaming george bush. >> what i make of that is maybe that is why the pot issue is so heavy on the d. [ laughter ] >> if you like to smoke pot, three more states said toot away. >> our crew just cheered. >> that was odd. >> make it about a bigger idea and take a lie and shew it up the other guy's nose. >> neil: whoa, whoa. okay. i didn't know how far you were going to go with that. >> maybe a decent chance of grand bargain in 2013 -- >> at the end of 2019 all of

this stuff expires. >> yeah. it will be bumpy. >> we are saying obama is re-elected president of united states. >> i missed the boat. i thought it would be big win for mitt romney. >> our leaders have to reach across the to do people's work. >> i'm looking forward to reaching out and working with leaderles of both parties. to meet the challenges. we can only solve together. >> barack obama, made it to the white house. for another four years. but everything is -- the stable is set the same. everyone hopes they'll bring a meal everyone will digest. the question is will they? >> neil: i got the outcome wrong. i promiseed my friend the good professor larry sabato i'd bring in chunky